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PMM
PMM
Premium - Reviewed results of the group for the year ended 28 February 2006
PREMIUM PROPERTIES LIMITED AND ITS SUBSIDIARIES
Incorporated in the Republic of South Africa
Registration number: 1994/003601/06
Share Code: PMM
ISIN: ZAE000009254
("Premium" or "the group" or "the company")
The directors report the reviewed results of the group for the year ended 28
February 2006 set out herein, together with comparisons with the results for the
corresponding year ended 28 February 2005
NOTICE TO LINKED UNITHOLDERS
Reviewed results of the group for the year ended 28 February 2006
Distribution up by 22 % to 61 cents per linked unit
Total return to unitholders of 106,6%
Assets exceed R1,3 billion
Increase in net asset value by 51.3% to 599 cents
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed Restated
Year to Year to
Change 28 Feb 2006 28 Feb 2005
% R"000 R"000
Revenue
- earned on contractual basis 12.7% 167,260 148,408
- straight line lease adjustment (1,363) 2,770
Net property income
- earned on contractual basis 17.3% 105,050 89,552
- straight line lease adjustment (1,363) 2,770
Administrative expenses (6,057) (4,103)
Interest received 752 2,778
Investment income - associate 30,604 19,520
- equity earnings 654 1,544
- fair value adjustment /
capital reserves 25,564 14,282
- other 4,386 3,694
Fair value adjustments of
investment
Properties
net revaluation 290,325 131,801
gross revaluation 288,962 134,571
straight line lease adjustment 1,363 (2,770)
Depreciation (500) (541)
Capital (loss) / profit on
disposal of investment properties (84) 615
Profit before interest 72.7% 418,727 242,392
Interest paid (0.3%) 34,553 34,658
Profit before debenture interest 84.9% 384,174 207,734
Debenture interest 22.0% 68,959 56,520
Profit before taxation 315,215 151,214
Taxation charge 84,162 43,918
Net income attributable to
ordinary shareholders 231,053 108,016
Earnings per share (cents) 113.9% 203.4 95.1
Earnings per linked unit (cents) 82.3% 264.1 144.8
Headline earnings per linked
unit (cents) 11.6% 59.9 53.7
Linked units in issue (`000) 113,607 113,607
Distribution per linked
unit (cents)
Dividends 0.30 0.25
Interest 60.70 49.75
Total 22.0% 61.00 50.00
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
Year to Year to
28 Feb 2006 28 Feb 2005
R"000 R"000
CASH FLOW FROM OPERATING ACTIVITIES
Net rental income from properties 98,496 84,910
Adjustment for :
- Depreciation 500 541
- Working capital changes 3,944 4,413
Cash generated from operations 102,940 89,864
Investment income 5,792 6,473
Finance costs (34,553) (34,658)
Taxation refunded /(paid) 436 (239)
Distribution to linked unit holders paid (63,052) (47,378)
Net cash inflow from operating activities 11,563 14,062
CASH FLOW FROM INVESTING ACTIVITIES
Investing activities (111,123) (54,461)
Proceeds from disposal of investment
properties 1,836 4,395
Net cash outflow used in investing
activities (109,287) (50,066)
CASH INFLOW FROM FINANCING ACTIVITIES 97,117 34,982
NET DECREASE IN CASH AND CASH EQUIVALENTS (607) (1,022)
Cash and cash equivalents at beginning
of year 498 1,520
Cash and cash equivalents at end of year (109) 498
RECONCILIATION -EARNINGS PER SHARE TO
HEADLINE EARNINGS PER LINKED UNIT
Reviewed Audited
Year to Year to
28 Feb 2006 28 Feb 2005
Cents Cents
Earnings per share 203.4 95.1
Add: debenture interest per linked unit 60.7 49.7
Earnings per linked unit 264.1 144.8
Fair value adjustments
- investment properties, net of deferred
capital gains tax (181.7) (78.0)
- associate, net of deferred tax (22.6) (12.6)
Capital (loss) / profit on disposal of
investment properties 0.1 (0.5)
Headline earnings per linked unit 59.9 53.7
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed Restated
Year to Year to
28 Feb 2006 28 Feb 2005
R"000 R"000
ASSETS
Non - current assets
Investment properties 1,197,743 804,063
Investment properties - straight lining
of rental 30,260 31,623
leases adjustment
Property, plant and equipment 18,999 17,392
Investments - associated company 63,031 33,725
Current assets 9,840 7,845
Total assets 1,319,873 894,648
EQUITY AND LIABILITIES
Share capital 1,136 1,136
Non-distributable reserve 442,365 210,451
Accumulated profit 24,563 25,766
Ordinary shareholders" interest 468,064 237,353
Debentures 211,989 211,989
Linked unitholders" interest 680,053 449,342
Interest bearing borrowings 413,931 301,618
Deferred taxation 152,381 68,491
Current liabilities - interest bearing 531 15,726
- non interest bearing 72,977 59,471
Total equity and liabilities 1,319,873 894,648
Linked units in issue (`000) 113,607 113,607
Net asset value per linked unit (cents) 599 396
STATEMENT OF CHANGES IN EQUITY
Share Capital Revaluation Distributable
capital reserve reserve reserve Total
R"000 R"000 R"000 R"000 R"000
Balance at 1 March
2004 before
restatement 996 8,370 128,759 1,875 140,000
Deferred tax rate
adjustment (10,524) (10,524)
Straight line
lease adjustment (20,486) 20,486 -
Balance at 1 March
2004 - restated 996 8,370 97,749 22,361 129,476
13 982 047 linked
units issued 140 140
Profit
attributable to
ordinary
shareholders 108,016 108,016
Dividends paid 0 (280) (280)
Transfer to non-
distributable
reserve 614 103,717 (104,331) 0
Balances at 1
March 2005 -
restated 1,136 8,984 201,466 25,766 237,352
Profit
attributable to
ordinary
shareholders 231,053 231,053
Dividends paid (341) (341)
Transfer to non-
distributable
reserve
Fair value
adjustments
- Investment
properties, net
of deferred
taxation 206,435 (206,435) 0
- associate, net
of deferred
tax 25,564 (25,564) 0
Capital loss on
disposal of
investment
property (84) 84 0
Balances at
28 February 2006 1,136 8,984 433,381 24,563 468,064
DISTRIBUTABLE EARNINGS
The following additional information is provided and is aimed at disclosing to
the users the basis on which the distributions are calculated.
Change Reviewed Year to
Reviewed Restated
Year to Year to
Change 28 Feb 2006 28 Feb 2005
% R"000 R"000
Revenue
- earned on contractual basis 12.7% 167,260 148,408
Net property income 17.3% 105,051 89,552
Administrative expenses (6,057) (4,103)
Interest received 752 2,778
Investment income - associate (3.8%) 5,040 5,238
Depreciation (500) (541)
Profit before interest 12.2% 104,286 92,924
Interest paid (0.3%) 34,553 34,658
Profit before taxation 19.7% 69,733 58,266
Taxation charge 272 30
Unit holders distributable
earnings 19.3% 69,461 58,236
Linked units in issue - (`000) 113,607 113,607
Distributable earnings per linked
unit - (cents) 19.3% 61.1 51.3
Distribution per linked
unit (cents) 22.0% 61.0 50.0
Notes to the financial statements
1. The reviewed abridged financial report has been prepared in accordance with
International Financial Reporting Standards (IFRS) and the requirements of the
Companies Act (Act 61 of 1973) and are consistent in all material respects with
those applied in the financial statements for the year ended 28 February 2005.
The results have been prepared and presented in accordance with IAS 34, Interim
Financial Reporting.
2. Prior year adjustments were made to the opening balance of Reserves, the
balance sheet and income statement to comply with International Accounting
Standard IAS 17. This standard requires contractual rental income from leases to
be accounted for on a straight-line basis over the period of the lease. In order
to avoid an overstatement of assets the fair value of investment properties has
been adjusted.
3. Deferred taxation on the fair value adjustment of investment properties was
previously provided at the Capital Gains Tax rate, which is currently 14,5%. In
terms of IAS 12, Premium has applied a combination of income tax and capital
gains tax rates based on the manner in which the property value is expected to
be realized. The prior year comparatives as well as the opening retained income
have been restated to reflect the higher tax charge.
4. The financial statements have been reviewed by Grant Thornton, whose
unqualified review report is available for inspection at the company"s
registered office.
Comments
Review of results
Premium"s results for the 12 months ended 28 February 2006 reflect the
continuation of the Group"s impressive growth record.
Premium has continued to focus on its strategic objective of acquiring and
redeveloping properties in the Pretoria and Johannesburg CBD and surrounding
areas.
Rental income and net rental income increased by 12.3% and 17.3 % respectively,
compared with the previous twelve month period.
Premium paid an interim distribution of 28.0 cents per linked unit. The total
distribution for the year of 61,0 cents per linked unit (2005: 50.0 cents)
equates to an increase of 22.0 % on that paid in the previous corresponding
period.
The total return to linked unitholders for the financial year based on the price
as at 28 February 2005 was 106.6%, comprising of capital growth of 93.5% and a
distribution of 61.0 cents per linked unit.
The continuing strong trading conditions and the stable in interest rates
combined with strict expense control and management"s ongoing programme of
redevelopment, have all contributed to the increase in distributable earnings
per linked unit.
Property portfolio
Premium acquired four properties located in the Pretoria CBD for a total
purchase price of R40,7 million. These properties are not only yield enhancing
but have the potential to be redeveloped further to enhance value.
Two properties were acquired in the Johannesburg CBD for a total consideration
of R9,0 million. Planning has commenced to convert these properties to
residential accommodation.
Two further residential projects in the Pretoria CBD were completed during the
period. The cost of these projects amounted to R61,0 million with an expected
initial yield of 12.0%.
Planning is currently at an advanced stage for the redevelopment of a portfolio
of properties situated in Hatfield. This project will create 661 residential
units as well as 4000m? of retail space. The investment is expected to yield an
initial return of approximately 10%.
Gearing
Premium"s gearing at the end of the financial year was 31.6% as against 35.7% in
the comparable period.
Interest rates in respect of 50.5% of borrowings at
28 February 2006 have been fixed at an average weighted interest rate of 11.6%
maturing at various dates ranging from March 2006 to August 2007.
Revaluation of property portfolio
It is the Group"s policy to perform directors" valuations of the property
portfolio on an annual basis. Each year one-third of the properties are to be
valued on a rotational basis by an external valuer. Previously for balance sheet
purposes, the property portfolio was only valued by the directors. The increase
in valuation of the property portfolio by R290,3 million to R1,228 billion
represents an increase of 30.9%.
Prospects
With a stable local economic outlook and continuing strong trading conditions
the Group is optimistic of achieving further growth in distributions.
Declaration of dividend No. 24 and interest payment ("the distribution")
Notice is hereby given that dividend number 24 of 0.16 cents (2005: 0.14 cents)
per ordinary share together with interest of 32.84 cents per debenture (2005:
27.36 cents), has been declared for the period 1 September 2005 to 28 February
2006, payable to linked unitholders recorded in the register on Friday,
19 May 2006. The last date to trade "CUM" distribution is Friday, 12 May 2006.
The units will commence trading "EX" distribution on Monday, 15 May 2006.
Payment date will be Monday, 22 May 2006.
No dematerialisation or rematerialisation of linked unit certificates may take
place between Monday, 15 May 2006 and Friday, 19 May 2006, both days inclusive.
By order of the Board.
City Property Administration (Proprietary) Limited
20 April 2006
A Wapnick J P Wapnick
(Chairman) (Managing director)
Directors
A Wapnick* (Chairman), J P Wapnick* (Managing director), M J Holmes#, R J
Inggs*, M Z Pollack#, S Wapnick+
*Executive +Non-Executive #Independent non-executive
Registered Office Transfer Secretaries
CPA House Computershare Investor Services 2004
101 du Toit Street (Proprietary) Limited
Pretoria, 0002 (Registration number 2004/003647/07)
P O Box 15, Pretoria, 0001 70 Marshall Street, Johannesburg 2001
Tel: (012) 319 8811 P O Box 61051, Marshalltown, 2107
Fax: (012) 319 8812 Tel: (011) 370 7700 Fax: (011) 668 7712
Date: 20/04/2006 02:08:39 PM Produced by the JSE SENS Department
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